Free Trial

Barclays: Farewell To YCC

BOJ VIEW

Barclays now expect the BoJ to call “for a comprehensive assessment at the March MPM, then the launch of full-fledged revisions to YCC based on the results of that assessment under the new BoJ governor at the April MPM. We also believe there is a strong possibility that the accord between the government and the BoJ, including the price stability target, will be softened somewhat.”

  • “We expect a phased implementation of YCC revisions, including the shortening of the targeted sector (initially from the 10- to the 5-Year sector with a band of 0% +/-25p), but if upward pressure on market rates increases more than expected, we also believe YCC could be dismantled rapidly over a short period. We look for the BoJ to return to conventional monetary policy targeting a single short-term policy rate (the overnight call rate) by mid-2023 (marking an end of the shortening process), then dismantle its negative interest rate policy (NIRP) and restore the zero interest rate policy (ZIRP) at the July MPM, sticking to that policy through H124 before hiking in stages from H224 to a rate of 0.3% at end-2024.”
  • “Our new call primarily reflects an increase in the sustainability of wage growth and inflation, changes in BoJ leadership (assuming the BoJ Policy Board shows a more neutral-to-hawkish bias with the new governor and deputy governors) and the window of opportunity to revise policy.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.